Both passing off and trademark infringement are legal ways to protect a business’ brand identity or intellectual property.
Passing off is a common law action based on the right against unauthorised use of a trademark. This tort protects a business’s goodwill from being misrepresented or misappropriated by a third party and which caused damage to the owner of that goodwill. In other words, an owner of a trademark has the right to a claim against another who represents the owner’s trademark, trade name, goods or get up as his own. Passing off is independent of trademark registration.
Trademark infringement applies when a registered trademark is used without permission under the Malaysian Trade Marks Act 2019. This infringement offers a statutory protection with remedies and enforcement mechanisms for illegal use of others.
Unlike the registration of a trademark being prima facie evidence of ownership in a trademark infringement dispute, a passing off action is for the business owner to protect its business reputation and preserve the goodwill it has garnered over a period of time with the public so as to ensure another business does not misrepresent that their products are related. In short, passing off focuses on misrepresentation of a business’s reputation and goodwill.
A very simple example that can differentiate these two would be :
Passing Off: “You are copying my business image and confusing customers!”
Trademark infringement: “You are using my registered trademark without permission!”
Passing Off
An example of passing off is when a product packaging, logo, and/or design is made so similar to a well-known brand or where the name of a business closely resembles that of an established business.
In the case of Reckitt & Coleman Products Limited v Borden Inc [1990] 1 AER 873, the courts consistently apply three elements, known as the classic trinity: Goodwill, Misrepresentation and Damage.
In Malaysia, the Federal Court in Ortus Expert White Sdn Bhd v Nor Yanni Bt Adom & Anor [2022] 2 MLJ 67 reaffirmed that the legal test for passing off is for the plaintiff to prove on a balance of probabilities the following:
– Goodwill or reputation of the plaintiff business attached to the goods;
– Misrepresentation by the defendant which is calculated to deceive a substantial portion of the public; and
– Damage or likelihood of damage to the plaintiff.
This classic trinity of ownership of Goodwill, Misrepresentation & Damage or Likelihood of Damage to the affected party, is a staple if one wants to pursue an action in court for infringement of a trade mark. If one defends such a claim, the breaking of that classic trinity is good strategy to challenge such a claim.
In the Ortus Expert White case, the plaintiff manufactured and sold cosmetic products marketed under the name “Royal Expert White” continuously in Malaysia and established a presence in the cosmetics market. The defendants were the Plaintiff’s former dealers or distributors. After the termination of the dealership, the defendants began marketing cosmetic products under the name “Real Expert White”.
The plaintiff’s products were identified by distinctive packaging, colour schemes, layout, and overall get-up. The products were sold to the general public and had acquired recognition and goodwill among consumers. The goodwill subsisted independently of trademark registration.
The Federal Court allowed the plaintiff’s appeal on the tort of passing off and held that the plaintiff had proven that it possessed substantial goodwill in its cosmetic products marketed under the name and get-up “Royal Expert White”, arising from continuous trading and recognition in the marketplace. Goodwill is a question of fact and does not depend on registration. The similarities between the products were sufficient to cause confusion among ordinary consumers. The confusion related to the origin of the goods and the belief that the defendants’ products were associated with or derived from the plaintiff.
The Federal Court further held that the defendants’ use of the name “Real Expert White” together with a similar get-up constituted a misrepresentation to the public. As for misrepresentation, it was held that the correct test is the overall impression created by the defendant’s product, viewed through the eyes of an ordinary consumer with imperfect recollection. Despite textual differences, the defendants’ get-up was sufficiently similar to amount to a misrepresentation. The defendants’ status as former dealers of the plaintiff further supported the inference that the resemblance was deliberate.
The Federal Court explained that once misrepresentation was established, damage to the plaintiff’s goodwill could properly be inferred. Damage includes loss of sales, dilution of goodwill, and erosion of exclusivity.
There are several food products that have been the subject of the tort of passing off claims that may be familiar to you, such as the Tamin brand popularly known for its soya sauce and other sauces and food products, as well as the Munchy’s “Lexus” biscuit products.